I got a polite but fairly annoyed letter note from Craig Berkman’s lawyers last week about how I had made false and disparaging comments about Mr. Berkman in an earlier post on this blog. After some back and forth, counsel supplied me with a copy of the verdict form. It’s here: berkman-trial-signed-verdict-form for those geeky enough to want to read.

It’s been an interesting back and forth with Mr. Berkman’s lawyers. On one level, correction is the right thing to do, as I always strive to be accurate. But it also raised a host of other questions. Had I not corrected the post, I imagine that I would perhaps have been sued for defamation.

The law of defamation is one of those special areas taught briefly to law students. It’s all about injury to reputation by false statements. The thing about someone claiming defamation is that you have to show–among other things–that the false statement damaged the plaintiff’s reputation. Always an interesting question.

The mistake I made in the post–since corrected–is that I talked about the fraud trial and the amount awarded. By the time the case got to trial, the fraud claim had been removed. Thus, the jury did not consider fraud and did not make a finding. There were, however, claims for conversion, which means intentionally taking property that isn’t yours and using it for your own benefit, and for negligent misrepresentation. But there was no claim for fraud.

I also got wrong the amount awarded against Mr. Berkman, implying in one place that it was $36 million, where I explain later in the original post that the amount was split between the defendants. That was just sloppy drafting on my part.

Anyway, my apologies to my readers for passing on bad information and to Mr. Berkman and his attorneys, as it’s not my intention to provide inaccurate reports. Hope this sets the record straight.

David Sugerman

Special guest today. I received a lengthy email from one of the jurors in the Craig Berkman/Arthur Andersen case, and I’ve republished most of it below. The juror is Karmen, a woman, who identifies herself as a juror who sat on the recent Berkman trial. Here is her account, which I’ve edited just a bit for brevity and clarity.  I’m fascinated by her account and hope you will be, too.

***

Hi David,

Thank you. Yes, it was a lot of work. There were over 500,000 pieces of paper in this case, fortunately we didn’t see them all though, we saw the same (approx 200 over & over & over :) This was my first time serving on a jury, so that was an experience in itself. I had no idea how it worked exactly or what to expect, and certainly didn’t think it would last for so long.

Its nothing like what you see on TV. The attorney’s crack jokes, and even Judge Hodson laughed and surprisingly, he didn’t have to use his gavel, not even once. Closing arguments take 20mins on TV, but ours took all day.

I know it was very hard going into that jury room during breaks and not being able to talk about the case, it was the elephant in the room we couldn’t acknowledge. So we scrutinized and talked about everything else attorney’s tie’s, the “theatrics” in the courtroom, wondering who the people sitting in there everyday were, and we played a lot of scrabble.

I didn’t always keep a straight face, or keep from rolling my eyes in the courtroom. It’s annoying & frustrating when the evidence is right there, yet someone is trying to tell you it’s not what it obviously is, or to listen to a witness who says nothing but “I don’t recall” for 2 hours. More than once I honestly thought “They must think we’re stupid”.  Well, none of us were.

I was very impressed with the Bullivant attorney’s & Mr. Fortino, and I think they did a wonderful job of representing the plaintiffs, and obviously proved their case to us without a doubt.  Mr. George even impressed me; he did a good job with what he had to work with, as far as the evidence, etc. But it was a weak case.

It was a little difficult seeing Mr. Berkman in there everyday, because he’d make eye contact with us and smile, and I hated that. I didn’t like it when the witnesses did that either, but you really have no choice but to keep looking at them when they do it. I understand why they do it, but it was difficult.

Our first witness was Jordan Schnitzer, and I really liked that guy on the stand. He wasn’t intimidated at all. He took no crap and got his licks in as fast as he was getting them.

The most difficult part was deliberating. I felt bad for Mr. Berkman, as a person. But I wasn’t there to see him as a person, I was there to weigh the evidence, and determine what (if any) damages resulted from that evidence.

When it came to damages however, I still had to occasionally remind myself that WE were not ruining him, WE were not tarnishing his name, WE were not the thieves, WE didn’t try to hide anything, and that whatever we decided was not OUR fault, but his…. He did this to himself, it was just our job to determine what was due to the plaintiffs and not to worry about how old, pathetic, broke or ruined he was as a result of his actions. But that wasn’t always easy, it was emotionally draining at times.. the whole thing was.

You realize the responsibility you have.  It’s a lot of pressure, and its stressful. What’s even worse, is not being able to talk to anybody about the stress you’re under.

In the end, I stand behind our decision 100% for Craig Berkman & Arthur Anderson.

This whole thing has been a learning experience I will never forget, or regret doing, and I’m glad I was a part of it. I feel justice was served.

I had so many people telling me I should try to get out of jury duty, and what to do & say to accomplish that.

The funny thing is, I’m 37 and always hoped to be called for jury duty, I just never was until now. So I was actually hoping to be picked.. and I’m glad I was. I think everyone should do it if they can, at least once. For the experience.

I was fortunate enough that my job paid me my regular wages while I served, but not everyone who served with me got paid from their job. They did it on the $10 a day the court paid.. for 5 weeks!! I give them so much credit for not asking to be excused on those grounds.

We had a really great group of people, there were some tense moments, but for the most part we all got along & after spending so much time together, we really got to know each other.. 7 of us went for much needed drinks yesterday and I hope we’ll keep in touch.

So there you have it, some of this jurors thoughts…

Thank you for your kind words,

Karmen

***

Karmen-Fabulous. Thanks to you and your peers for making our jury system work. It’s really one of the true strengths of our country, isn’t it?

David Sugerman

Edited and corrected: 27 July 2008

Note: The original post–since corrected–mistakenly implied that the jury awarded $36 million against Mr. Berkman. That is incorrect. The award against Mr. Berkman and his companies was approximately $14 million, with the balance being awarded against Arthur Andersen. As well, there were references to “fraud” in the original post. While the jury found against Mr. Berkman on breach of fiduciary duty and negligent misrepresentation, it did not consider a fraud claim against him. I regret the inaccuracies and appreciate the information supplied by Mr. Berkman’s lawyers that provide a basis for clarification.

-DFS

The outcome of the Berkman investor trial–a $36 million verdict divided between Craig Berkman, his company, and Arthur Andersen–isn’t all that surprising to casual observers.

The article is interesting for more, as it gives a behind-the-scenes look at the costs and economics of litigation when well-heeled investors sue over deals gone bad. According to the news report–and I have to wonder whether this is accurate–the lawyers for the investors spent in excess of $1 million to put on the case. I assume that this million dollar figure is only in expenses (”costs”) spent out of pocket and does not include a dime for the thousands of hours that the investors’ lawyers, the Bullivant law firm, spent on the case.

The Bullivant firm had the luxury of representing wealthy investors and pension funds in chasing down the money, so I assume that the investors themselves footed the bill for the expenses. No word on whether the Bullivant firm received payment on an hourly pay-as-you-go fee arrangement or on a contingent fee, which is generally a percentage of the amount recovered by the attorneys.

Regardless, it sounds like my colleagues at the Bullivant firm did a hell of a job putting this thing together. Their success is well-deserved. To his credit, Mr. Berkman noted that the jury had made his judgment, and he would respect that. No doubt the jury worked hard, as this was a long trial with ample amounts of financial evidence.

David Sugerman

This report from The Oregonian on the Berkman trial. According to news reports, Mr. Berkman testified yesterday that he always intended to repay the investor money that he took, and thus they were loans.  I imagine this one is going to be hard one to pull off.

The news reports also highlight Mr. Fortino (one of the investors’ lawyers) cross examination, reporting that Paul Fortino got Mr. Berkman to concede that “loans” are customarily transactions in which the borrowers atcually know that they were lending money. Apparently, these were “loans” that weren’t actually disclosed to the borrowers.

It’s not in the news report, and I don’t have a transcript or first-hand knowledge, so the rest of the cross examination is something I can only imagine. But I suspect that Mr. Fortino went through a litany about a lack of documentation including promissory notes, contracts, loan documents, and the like. He probably had a lot of fun asking about the particulars of these “loans” like the amount of principal, the interest rate, and the repayment date.

I suppose all of this should be written and read with a shred of skepticism, or what in law talk we call, a caveat. News reports sometimes get trials wrong…really wrong. Sometimes that’s innocent when a hard working and honest journalist simply misses something. Sometimes–rarely, I hope–it’s because the reporter has an agenda. And sometimes it’s as simple as an editor nixed part of the report for good or bad reason. So it’s possible that the news report gives a misleading impression of the trial. And all of us owe the system and the parties the grace of waiting for the jury to tell us how it turns out.

Still, it’s impossible not to react to the news report. While I haven’t watched a lick of this trial, it strikes me that Mr. Berkman is coming across like a youngster who hasn’t mastered the fine art of lying. There are several common attributes of good liars, including telling a story that is plausible enough for the listener to suspend his or her critical thinking. And if you’re going to be a good liar, never spin a yarn that is completely at odds with how the world works. Because who could possibly believe that this was a loan?

David Sugerman